Last week, our team at Finnair received the most inspiring and exciting news! Finnair’s performance in corporate responsibility was recognised with the highest distinction in an independent, non-solicited analysis of the investment universe, covering environmental and social responsibility as well as governance (ESG).
Following their most recent review, oekom research AG, one of the world’s leading ESG rating agencies, upgraded Finnair’s investment status to ‘Prime’. In essence, this means Finnair is an issuer they are recommending to their sustainable and responsible investor (SRI) clients for investment.
To top it all, as at the report date 2 March 2016, Finnair was the sole industry leader with the highest corporate responsibility rating ”B-” in the entire Transport and Logistics sector on oekom’s radar, comprising 77 companies worldwide.
What does all of this mean?
Sustainability is emerging as an important investment factor, and our top ranking is a clear sign to investors. Sustainable and responsible investing (SRI) integrates corporate responsibility as a factor in investment decisions, to complement conventional financial analysis. While the jury is perhaps still out on its effectiveness, the rationale is generally to reduce risk, improve long-term returns and/or “do good” by financing companies that generate the most positive externalities, or the least collateral damage.
ESG analysis means a rigorous and formalised look into a company’s environmental and social responsibility as well as corporate governance, typically against a peer group of companies operating in the same sector. At the same time, typical SRI strategies include the exclusion of ESG underperformers (“least responsible companies”) or favouring companies that represent the best in their class in terms of these criteria.
ESG rating criteria vary by sector and are geared to emphasise the most relevant sustainability issues for each type of business. For example, environmental emissions are usually more relevant for an airline than for a bank, while the opposite would apply to indirect impacts on the economy. However, to be recognised as a leading sustainability performer in any industry, comprehensive efforts are required on all fronts.
Finnair’s comprehensive approach to sustainability
Finnair’s key strength in oekom’s analysis was consistent performance across all of the sustainability areas covered. Our relative strengths included personnel rights and benefits, supply chain responsibility, robust environmental standards and safety management systems, and the eco-efficient and silent fleet in our mainline operations. In contrast, more room for development was identified for example in policies for final fleet disposal and the transportation of hazardous materials.
While we are naturally happy about the kudos, we also acknowledge that we still have a lot of ground to cover, the world of sustainability is constantly evolving and new standards will always be set higher.
Although actions ultimately speak louder than words, Finnair also takes pride in transparent communications. Finnair was one of the first airlines in the world to report comprehensively on its corporate responsibility under the Global Reporting Initiative (GRI) framework since 2008. Previously, in 1997–2007, Finnair published an environmental report. For reference, the most recent GRI report was just completed last week.
Aircraft image: Airbus/A. Doumenjou.